Arizona lawmakers consider new film tax breaks

PHOENIX (AP) -- Arizona lawmakers looking to woo Hollywood are flirting with resurrecting a tax incentives program aimed at competing with New Mexico and other states that have long thrown free cash at production companies that film there.

The bill seeking to grant millions of dollars in tax breaks through 2043 would require production companies to hire some Arizona residents. The Senate Committee on Commerce, Energy and Military unanimously approved the bill Wednesday after local film and tourism leaders framed it as a jobs bill and argued Arizona would suffer economically if it didn't do more to lure Hollywood to the state.

"This will grease the skids for Hollywood to come over here," said Sen. Al Melvin, a Republican from Tucson and the bill's sponsor, after the vote.

The bill, which has been introduced for the fourth time in four years, includes a 20 percent tax credit for multimedia productions that spend at least $250,000 in Arizona. Businesses could seek tax credits worth up to $15 million as long as they say the production was filmed in Arizona in the end credits, among other requirements.

The Arizona Commerce Authority would be tasked with weeding out abuses and ensuring the businesses are holding up their end of the deal. No more than $70 million in income tax credits each year could be preapproved under the proposed program.

Obscene images would not qualify for the credits.

Ideally, the tax breaks would pump millions of dollars into Arizona's struggling economy through tourism and film production, said Mike Kucharo, president of the Arizona Film & Media Coalition.

Critics point out a tax incentive program for production companies passed in 2005 was deemed a financial disaster in a 2009 report by the Arizona Department of Commerce. The study found that the state handed out $2.6 million in tax credits and earned almost $600,000 in state and local taxes, resulting in the state's general fund spending about $2 million.

"A lot of the same claims that were made then are being made now about the program about creating jobs," said Scot Mussi, president of the Arizona Free Enterprise Club, a lobbying group that supports low taxes. "The program was in fact a disaster."

With its temperate weather and iconic tourist destinations, Arizona is a popular production location, with more than 30 movies and television shows filmed here in recent years, according to the Arizona Film Office. In all, the film and television industry accounts for more than 9,000 Arizona jobs.

New Mexico, with its similar landscapes and climate, saw 44 film and television productions in recent years, according to the New Mexico Film Office. New Mexico offers a 25 percent tax rebate on all direct production expenses.

In 2011, 45 states and Puerto Rico offered motion picture incentives, according to the National Conference of State Legislatures.